ims report 2014 - the edm industry study by kevin watson

IMS Business Report 2014 by KevinWatson.net

IMS Business Report 2014 An annual study of the Electronic Music industry

by Kevin Watson

1


Sales of tracks by country and analysis of most popular tune

The IMS Business Report 2014 covers five different aspects of the industry

Music

DJs & Live Acts

Clubs & Festivals

Companies & Brands

Industry Overall

1

Profiles of leading artists, including social media following 2

Popularity of festivals and focus on Indian market 3

Key players in industry, recent M&A activity and partnerships 4

Updated estimate of value and growth of Dance Music globally 5

Hint: follow the sections through the report by looking for the starred number at the top of each page 2


Source: The Nielsen Company & Billboard’s 2013 Music Industry Report, industry press

USA Digital Track Sales by Genre (YoY % Change 2013)

(12)

In the USA, Dance was the only genre to achieve positive growth in digital track sales in 2013

(6)

(2)

(15)

8

•  For the second year in a row, Dance was the highest growing genre in terms of tracks sold

•  Dance’s share of both digital tracks (5%) and albums (3%) also improved for the third consecutive year

•  In 2014, the Grammy awards for best album & record went to a dance act for the first time ever (Daft Punk)

1 Music

3


Source: Official Charts Company / BPI

Dance Music Share of Sales by Format (UK)

Compilations

Dance’s share of single, album & compilation sales in the UK reached a 7 year high in 2013

Singles

Albums

•  Dance music share of all formats grew strongly in 2013 versus 2012

•  The genre is now back to, and in some cases exceeding, the levels reached in 2005/06

•  12 of the 100 top selling albums were Dance in 2013 (vs 5 in 2012)

•  These included releases from Rudimental, Calvin Harris & Disclosure

1 Music

4


Google’s music timeline shows global popularity of Electronic Music is now at an all-time high

Source: Google Music Timeline: http://research.google.com/bigpicture/music/#DANCE_ELECTRONIC

1990 2000 2010 1995 2005

Dance / Electronic Music – Popularity by Year (1985 – April 2014)

* Relative popularity of Dance / Electronic music by year of release, using number of users who have an artist or album in their music library, normalised by total number of albums released in that year

Popu

larit

y*

All time high

1 Music

5


Avicii’s ‘Wake Me Up’ is the most streamed track of any genre on Spotify, at over 200m streams

Source: Spotify

Track achieved 100m streams in September 2013, 200m in February 2014, and could now have hit 250m!

1 Music

6


However, YouTube has the most ‘plays’ of the track, and downloads generate the most revenue Avicii – Wake Me Up – Views / Plays & Estimated Track Revenue by Source*

INDICATIVE Note: * As at April 2014; Total revenue to all stakeholders Source: channel websites, official chart bodies, Google, BPI, Wikipedia, The Cynical Musician, IMS Analysis

600 250

24 8

1.8 1.8 5.2

-

Total Revenue

($m)

Total Plays (m)

1 Music

7


Source: Forbes; Note: * Excludes ‘DJ Pauly D’

Forbes (much debated) estimates suggest the earnings of the top DJs & Artists doubled in 2013

46

32

30

25 13.5

14

15

22

2012 $114m

$m

2013 $225m

Comparing Forbes’ other earnings lists suggests Calvin Harris earned more than Cristiano Ronaldo ($44m) & Jay-Z ($42m) in 2013

Forbes Electronic Cash Kings Top 9* (2012 & 2013)

2 DJs & Live Acts

8


Younger DJs, such as Hardwell, have grown their Facebook fan base at 20 times the rate of Guetta

Source: Rankingz EDM Monitor 2013

Total Likes (m) Increase in Likes Age (years) Facebook (YTD Dec ’13) 50

Slow Growth

Young, fast growing

Huge Growth

2 DJs & Live Acts

9


On average, DJs increased their twitter followers by 77% in 2013, with some achieving 400% growth

Increase in Followers Twitter (YTD Dec ’13)

2

Source: Rankingz EDM Monitor 2013

Aver

age

of to

p 35

0 D

Js

DJ Mag’s #1 DJ

More established

DJs

•  On average, DJs increased their twitter followers by 77% in 2013

•  3 of the top 4 DJs in terms of growth are duos – Dimitri Vegas & Like Mike, W&W and Nervo

•  The World’s #1 DJ, Hardwell, was 6th highest, more than doubling his twitter followers in the year

DJs & Live Acts

10


Ranking DJs using online data produces some different results to the 2013 DJ Mag Top 100

Source: DJ Mag Top 100, ‘The Top 100 DJs of 2013, by Data’ presented by JustGo + toppletrack

2

2013 Ranking by Source

Hardwell is #1

Relatively stagnant fan

base

•  DJ Mag Top 100 is based on public vote

•  JustGo / toppletrack methodology considers social media fans added in year (30%), total social media fans (60%) & Google mentions related to piracy notices (10%)

Huge musical success

Massive social media fan growth

Up & coming artists / DJs

DJs & Live Acts

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Source: Music Metric

Hardwell Total Fans Added by Day (5th Feb – 5th May 2013 & 2014)

In one year Hardwell has quadrupled the fans he adds per day, peaking at 70k on 31st March 2014

2013

2014

2

Ultra 2014 (1 weekend)

Ultra 2013 (2 weekends)

DJs & Live Acts

12


Total Facebook Fans

Festivals have started to match DJs on social media, and exceed them on YouTube views

3

50

55

Total Views of Most Popular Video

Aftermovie #1 DJ and

Top Festival have similar

Facebook following

DJs Festivals Clubs DJs Festivals Clubs

m m

Source: Facebook, YouTube (as at 7th May 2014); * Includes Matinee Group Video

Festivals & Clubs

13


Electronic Music fans are much more engaged on social media, especially during live events

Source: Eventbrite EDM Audience Analysis

17 m posts per

annum from EDM

concerts

11 tweets per day (Vs 1.85 twitter

average)

1 in 3 posts are about

EDM – 52% more than fans of other genres

1 in 4 posts about EDM occurs during a live

event

30% more talk about

concerts & events

4x more tweets about

the music they listen to

3 Festivals & Clubs

14


India Dance Music Festival Capacity by Event

10

Goa

The Indian festival scene exploded in 2013, with capacity almost doubling & several new events

k

20 35

90

Mumbai

Bengaluru

INDICATIVE

Source: Percept, event websites, Wikipedia, industry press

Supersonic

Delhi

Enchanted Valley Carnival

130

175

325 •  Sunburn has dominated the festival scene & doubled attendance since 2011, adding three new locations

•  A second major festival, Supersonic, launched in December 2013

•  Indian cities have also welcomed arena gigs from Swedish House Mafia (18k), Avicii (35k) & Tiesto (20k) since the beginning of 2013

Sunburn

3 Festivals & Clubs

15


USA

However, the Indian festival market is still significantly under-penetrated Vs the USA

Source: Percept, event websites, Wikipedia, CIA World Factbook, Resident Advisor, Billboard, industry press, IMS Analysis

Population 15 – 24

Years Old

Dance Music Festival Capacity

(2013)

225m

0.3m

45m

1.4m

India

IND

ICATIVE

If penetration in India reached just half that of the USA, it would be equivalent to 18 new festivals the size of Tomorrowland (3m capacity)

3 Festivals & Clubs

16


Annual Turnover by Company ($m)

Companies providing software and hardware for DJs & artists have experienced huge growth

21

Source: FT, New Zealand International Business Awards, Pioneer; Note: * estimate based on range

4 Companies & Brands

110

11

47

n/a

26*

2013

2008

•  Leading manufacturers of DJ & music production software have seen huge revenue growth over the past 5 years

•  Both Native Instruments & Ableton have more than trebled their turnover

•  Pioneer has also cited ‘DJ equipment’ as one of the key drivers of it’s recent financial growth across all key markets (excluding Japan)

•  Over the coming 12 months, Pioneer expects significant growth from the sector, especially in Europe

17


SFX have continued their acquisition spree and signed some significant partnerships in 2014

Source: SFX Year End Report, industry press

SFX Entertainment Acquisitions & Partnerships by Type (Oct ‘13 to May ‘14)

•  Significant investments in EDM related clubs & festivals

•  Also 50% of Rock in Rio festival

Arc 90, Fame House, Tunezy, Meta Agency, Learned Evolution

Totem One Love Group, Made Event, i-Motion, Opium Group, Rock in Rio (50%, $62m), React Presents, ID&T

Anheuser-Busch InBev, Clear Channel, Syco & T-mobile (“Ultimate

DJ”)

Paylogic (75%, $22m), Flavorus ($18m)

TMWRK, Perryscope Produc- tions

4

Festivals & Clubs

Ticketing

Marketing

Other

Partner-ships

Type Companies Comments

•  c.$40m spent on ticketing companies

•  Multiple additions to bolster in-house FX1 team

•  Includes artist management and merchandising companies

•  Sponsorship deal with AB InBev •  Marketing & content partnership

with Clear Channel

SFX have spent in excess of $120m in the past 6 months, but partnerships such as that with AB InBev should start generating revenue of c.$25m pa

Companies & Brands

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SFX Entertainment – Year In Review

Source: SFX, Financial press, Yahoo Finance (18th May 2014)

•  In 2013, SFX entities sold over 6m tickets to 1,500 events across 23 countries in 6 continents

•  In Q1 2014, festival attendance doubled to 175k, with 9 events taking place (Vs 4 the year before)

•  A switch of focus away from other (smaller) events meant attendance at those dropped 28% to 260k

•  Overall, SFX expects to deliver 70 festivals in 2014, with most growth in North America

IPO (Oct ‘13)

4

•  In October 2013, SFX floated on the Nasdaq, selling 20m shares for $13 each, raising $260m and giving a market cap of $1bn

•  Since then, the share price has fallen almost 50%, with a net loss of $63.6m reported in Q1 2014 (up from $19.3m in Q1 2013)

Operational Performance Financial Performance

Now (May ’14)

13.00 6.70 Share price ($)

1,000 594 Market Cap ($m)

Companies & Brands

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Electronic Music remains central to Live Nation’s strategy, hence their deal with Motorola

•  In December 2013 Live Nation signed a deal with Motorola

•  initially covered activity such as installations at LN’s EDM festivals

•  This was extended in April 2014 to cover The Discovery Project

•  a competition for undiscovered talent in music, costume design, art installations & stage design

800k increase in festival attendance "largely due to EDM activity"

“Newer…genres also contributed to our growth, with…EDM as our fastest growing genre”

“Our strategy is to grow and innovate through … expanding our electronic dance music, or EDM, festival and show base”

Source: Live Nation Annual Report 2013, industry press


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Four of the World’s biggest entertainment brands have entered the Electronic Music market in 2014

Source: Variety, Billboard, Industry Press

Avicii, Carlos Santana, Wyclef to Perform World Cup Closing Anthem

HBO Developing Electronic Music Comedy with Calvin Harris, Jay-Z Variety, January 2014 Billboard, March 2014

Disney Gets Into EDM, Overtakes Interscope in Album Market Share Billboard, May 2014

SFX, Syco Entertainment, T-Mobile Partner for 'Ultimate DJ' TV Show Billboard, April 2014


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Final Estimate

A combination of two methodologies has been used to estimate the value of the industry

5

1.  Research individual elements of each segment – e.g. total number of festivals & capacity

2.  Triangulate different sources to generate estimate of overall size of segment

3.  Multiply by average spend / revenue per element – e.g. spend by festival attendee

1.  Use value of overall music industry segments, such as Recorded Music, Live & instrument sales

2.  Estimate market share of Electronic music in each segment (e.g. c.5% of UK recorded music)

3.  Combine and add together to give total value of Electronic Music industry

Bottom-Up approach Top-Down approach

Industry Overall

Compare results of two approaches and produce final estimate of value of overall Electronic Music industry

A B

C

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Overall, we estimate the global Electronic Music industry is now worth over $6 billion p.a.

INDICATIVE

Source: Wikipedia, RIAJ, BPI, The Nielsen Company & Billboard’s 2013 Music Industry Report, Google Research, Forbes, Economist, Official Charts Company / BPI, PWC, EVAR Advisory Services, UK Music, FT, Pioneer, SFX, CIA World Factbook, electronic-festivals.com, industry press, IMS Analysis

Electronic Music Industry Revenue by Sector (2013/14)

5 Industry Overall

Includes revenue from traditional recorded music sales (c.$800m) and from streaming & video services such as Spotify (c.$600m)

Music

Includes sales of DJ Software & Hardware (c.$360m), DJ earnings from additional sources (c.$60m) and value of other platforms such as Soundcloud (c.$140)

Other

Income from top 3 festivals (c.$230m), other festivals (c.$800m), clubs in Las Vegas (c.$800m) and other clubs across the globe (c.$2,400m)

Festivals & Clubs

=$6.2 billion

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InternationalMusicSummit.com

twitter.com/IMSIbiza

Danceonomics.com

KevinWatson.net

twitter.com/KWdotnet

The International Music Summit (IMS) in Ibiza & beyond

The sources used in this report & other industry insight

The author, including contact details for asking questions

Want to find out more? Contact us using the info below

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ims report 2014 - the edm industry study by kevin watson

Documents

music industry report

ims business report

growth of dance music

electronic music industry

music library

google music timeline

ims analysis

dance act